Oil majors earn too much to cause controversy, and many governments are ready to act! The "profiteering tax" is on the string!

This summer, when global consumers are struggling with inflation, international oil majors have made a lot of money, reporting record quarterly earnings
.
In European countries such as the UK, arrangements for a "windfall profits tax" on energy companies that have repeatedly set record profits are already in place, but whether this will benefit the public is debatable
.
Experts believe that the implementation of the "windfall profits tax" is reasonable, but it should not be considered an ideal solution to
the energy crisis.

The British oil giant's high profits caused dissatisfaction

According to the British "Daily Mirror" report, BP's profit in the second quarter of this year reached 8.
451 billion US dollars, the highest quarterly record since 2008; the profit in the first half of the year increased by 170%
compared with the same period last year 。 Shell, Europe's largest oil company, also announced in early July that it had broken its profit record for two consecutive quarters, with Shell achieving a net profit of $18.
04 billion in the second quarter, up 154% month-on-month and 426% year-on-year; In the first and second quarters of this year, Shell's adjusted net profit was US$9.
13 billion and US$11.
472 billion, respectively, twice setting a quarterly record
since 2008.

Overall, the recovery in the value of oil and gas assets, higher oil and gas prices and volume growth, and further cost control by companies have combined to generate strong profits for each company; Although the withdrawal of equity and assets from Russia has brought losses to various enterprises, it has not been able to stop the general trend
of performance growth.
At the same time, many households in the UK are struggling to cope with rising energy bills
.
For this, BP was accused of "making a lot of money easily"
.
The British Automobile Association (AA) also pointed out that BP has the most expensive
oil prices among the many gas stations in the UK.

The Financial Times also quoted the call of RAC and AA, the two major British motor driving associations, saying that BP and major supermarkets should control oil prices
as soon as possible.
A number of local think tanks in the UK have warned that high oil prices are also driving inflation in the UK to soar to 15%
in the first quarter of next year.

With oil companies soaring profits and soaring inflation around the world, there are calls for governments to impose higher taxes
on oil companies.
In July, the House of Commons approved a "windfall profits tax" that would impose an additional 25% windfall profits tax
on the profits of oil and gas producers in the UK's North Sea region by 31 December 2025.
The bill allows oil and gas companies to better secure energy security
by investing in new oil and gas extraction projects to offset some of the taxes.

Sunak, who is running for Britain's ruling party and prime minister, announced a £15 billion package in May as the government's chancellor of the exchequer to help British families
facing further increases in their energy bills this fall.
However, the pressing situation caused the then chancellor of the Exchequer to completely change his position, announcing a £5 billion "windfall profiteering tax" on oil and gas companies to help pay
for the plan.

The United States and Europe are considering a "windfall tax"

Across the ocean, America's energy giants are also reaping record profits
.
ExxonMobil and Chevron also recently announced record quarterly profits
.
In the last quarter ended June 30, ExxonMobil generated $17.
9 billion in revenue, $2 billion
higher than the previous record.
Chevron's second-quarter profit of $11.
6 billion also hit a record
.
Deutsche Zeitung reported that ExxonMobil, Chevron, Shell and France's Total Energy Company generated almost twice as much revenue in the last quarter as
in the same period last year.
U.
S.
President Joe Biden has come under pressure from members of his own party to introduce a "windfall tax
.
" Biden himself has repeatedly criticized the lucrative profits of U.
S.
energy companies as unacceptable
.

Equally eager is Germany
.
With consumer prices at record levels, a growing number of Germans are backing calls by ruling SPD and Greens to
impose so-called special taxes on excess profits in times of crisis.
According to a recent poll conducted by polling firm Infratest Dimap for Deutsche Television, 76 percent believe that a special tax on the high extra profits of energy companies is correct
.

Against the backdrop of twin crises of energy and inflation, oil companies' high profits have been heavily criticized by politicians, union officials and environmental activists
.
The leader of the German Social Democratic Party renewed his call for such a tax
in early August.
She said on television that this is for companies that do not make excess profits on their own performance and innovation, that is, companies that profit from the energy crisis
.
The government should ease the burden on
people and small companies.
Rasmus Andresen, a member of the European Parliament from the Green Party, said: "The Greens are proposing a 50% tax
on excess profits.
Another part of these profits should be used to invest in renewable energy
.
”

In fact, some countries are already introducing such taxes
.
Spain hopes to absorb $7 billion from energy corporate profits over the next two years and direct it to social spending
.
Belgium intends to impose a 25 percent tax on excess profits of energy companies and use that revenue to reduce energy costs
for private households.
In Italy, a similar "windfall tax" on energy companies has been reached
.
Austria and France are considering similar measures
.
EU consumer protection commissioner Vera Yulova said that the implementation of a special tax is beneficial and effective, because such a tax is only for the additional revenue that the government receives from temporary excess profits, and corporate decision-making is not affected
by it.

Collect it or not? The parties are still at the game

In the face of government and societal pressure, IOCs have been adamantly opposed to a "windfall profits tax" and have proposed to increase investment in green energy as a way
to decarbonize the sector.
Shell CEO van Bolden has expressed support for green investment as an alternative
to taxation.
"Making money is a responsibility that allows us to continue to invest in energy security, as well as in the energy transition
.
" "Ultimately, this will make society less dependent on
oil and gas," he said.
”

Earlier, BP announced an investment plan of up to £18 billion, hoping to help the UK safeguard energy security and achieve net-zero emissions; Shell has also said it will invest £20 billion to £25 billion in the UK's energy system over the next decade, with more than 75% of it going to low- and zero-carbon projects
.
But such a scale of investment does not satisfy local government officials
.
As the windfall tax approaches, I am afraid that the investment plans of oil giants will also need to be reconsidered
.

Quoted as energy expert McNally, oil companies know they will be under increasing pressure if ultra-high profits continue, but they expect the government to take a balancing approach
.
McNally said: "Because oil prices and profits are extremely volatile, oil companies are aware that they are entering a period of great challenge and uncertainty; While they are funding government spending, they are also under political pressure
to accelerate decarbonization.
”

"Oil companies are not making huge profits and are not using it for the green transition, but continue to invest in fossil fuels
.
" The German "Handelsblatt" reported on the 6th that the explanation of energy companies was attacked
.
According to the report, oil majors are investing in share buybacks
.
In the first half of this year, BP shared the profits
from the crisis with its shareholders through a $3.
8 billion buyback program.
At the same time, despite significant additional revenue, money is not flowing into the company's green transition
.
Although the company has announced increased investments, it still funded
the expansion of its gas and oil businesses in the second quarter.

In the U.
S.
, almost all of ExxonMobil and Chevron's funds go to the so-called Blue Hydrogen Project, which is based on
natural gas.
The Shell Group's investment in renewable energy and energy solutions increased by just $200 million, but investment in the upstream (oil and gas extraction and processing) sector increased by more than $1 billion
in just 3 months.
Overall, most of the money for these 5 companies is in their own pockets
.

Lin Boqiang, dean of the China Energy Policy Research Institute of Xiamen University, said in an interview with the Global Times on the 8th that energy taxes similar to "windfall profits tax" are being implemented in many countries, and whether it is reasonable needs to be viewed from different perspectives
.
China will levy special oil revenues, and Russia's "profiteering tax" comes in the form of tariffs on energy exports
.
At present, international energy prices are very high, especially the upstream cost of the industrial chain is too high, and it is difficult for the middle and lower reaches to make money
.
The role of the "windfall profiteering tax" is to take some money from the oil and gas companies to do other things, such as subsidizing the people
.

Lin Boqiang also said that the "profiteering tax" is not suitable as a solution to the Western energy crisis, "It should be noted that when the energy market was low in previous years, these oil companies did not actually have high profits
.
" Now when the market price is relatively good, it begins to collect 'windfall profits tax' or increase tariffs, especially when the global energy supply and demand are relatively tight, which will hit the enthusiasm of
enterprises to produce.
”

German Finance Minister Christian Lindner is opposed to the country's growing proposal for a special tax on excess profits
.
"Special taxes will open the floodgates for populist responses in tax policy," Lindner warned that it would jeopardize trust
in the tax system.